Price effects of the Iran conflict already showing up in March data. For the month, prices up a lot and real earnings are down. And it almost surely gets worse from here. 1

A fun bit of history: this is the conclusion of Ben Bernanke's speech on the occasion of Milton Friedman's 90th birthday. (Delivered in 2002!) www.federalreserve.gov/boarddocs/sp...

In what world is it okay for the Defense Secretary to make multi-million dollar investments in defense companies:
a) Ever;
b) In the run-up to starting a war in the Middle East

FT has the scoop: www.ft.com/content/744e...

In a functional democracy, he would offer his resignation tonight.

All this is to say: the mild increase (real $) / mild decline (GDP share) in welfare spending is probably not a primary driver of these political changes. But some of the other economic consequences of an era of relative decline for a specific subgroup of the US population could be important.

Working on a paper on this, but you can imagine a world where a mild increase in income and consumption inequality (below) + a dramatic increase in the ease and frequency of interpersonal social comparison has pretty meaningful effects, esp. with a Fred Hirsch / Robert Frank-shaped utility function.

In general, the argument that economic anxiety / falling living standards explain the political changes we've seen over the last decade is clearly an oversimplification. But it seems plausible that *relative* changes in well-being for wealthy and working-class americans might have played some role.

Fair enough, but welfare spending *as a share of GDP* was flat / falling over the entire period since the Volcker shock. I agree with your skepticism of the original claim, and I can think of decent reasons to say real $ is the right measure rather than a share of GDP, but this isn't clear-cut.

What the cost of the Iran war could cover if used differently Select services and how many more people they could support with funding equivalent to what is being spent on Iran war Table with 6 columns and 6 rows. People covered by Medicaid for a year Children receiving free school lunch for a school year People housed in Section 8 for a year Children covered for year of child care Adults with free tuition at community college for a two-year associate degree $25 billion Estimated likely cost of war as of March 26, 2026 3,106,000 29,614,000 3,147,000 1,780,000 2,865,000 $200 billion Reported likely request for additional war funding 24,850,000 Every child in the United States, with >$170B left over Every eligible person, with >$60B left over 14,237,000 22,917,000 One 30,000-pound bomb 625 5,925 625 350 575 One Tomahawk missile 275 2,600 275 150 250 One THAAD missile 1,575 15,050 1,600 900 1,450 One Patriot interceptor 500 4,850 525 300 475

New from me: by the end of the week, the war in Iran will likely have cost $25 billion, with Trump poised to ask for $200 billion more

Below is a writeup, but the meat of it is this table, which shows what an equal amount of funding could cover domestically
www.americanprogress.org/article/by-t...

One Big Beautiful Bill? A Preliminary Assessment The “One Big Beautiful Bill Act of 2025” (OBBBA), signed into law July 4, 2025, is a sweeping tax-and-spending package that could reshape federal fiscal policy for decades to come.

In our new paper, colleagues from @taxpolicycenter.bsky.social and I offer a preliminary assessment of OBBBA, covering what it changed and what its effects will be on the budget, the economy, distributional outcomes, and future fiscal policy.

taxpolicycenter.org/research-rep...

The International Role of the U.S. Dollar – 2025 Edition The Federal Reserve Board of Governors in Washington DC.

I'll be curious to hear how this changed in late 2025-2026 when the new version of this report comes out. Link here for anyone who'd like to read more:

A stylized fact that was new to me: the amount of gold (measured by weight) held by central banks barely changed through late 2025. The reason gold reserves went up so much as a share of non-US central bank holdings had more to do with the rising price of gold than a geopolitics-influenced choice!

I feel like it'd definitely be an interesting topic for a longer post! suspect many others might also be keen to read too.

Really great thread - one of the clearest explanations I've ever read of how these dynamics work. Have you written anything longer-form on this?

Really useful thread on housing supply, affordability, and how we should think about elasticities and supply-demand dynamics in the housing market!

Claude Code 27: Research and Publishing Are Now Two Different Things Some Claude Code fan fiction about the economics of publishing with AI agents set in the very near future

I think the big issue is in the medium-term capacity of publishing institutions to adapt to things that *look like* high quality work on a skim, even to an expert. Scott Cunningham is great on this - it could be a real problem in the medium term, even if it is incredibly research-enhancing later on!

Defense secretary openly states that a pro-Trump billionaire taking over a news network (following regulatory help from the administration) will result in coverage more favorable for the administration.

The Van Hollen-Beyer et al tax cut bill was released today so just re-upping our prior thread and adding a few tweets with numbers now that more details are available:

$11.3 billion could cover any of the following for a full year:
-1.4 million people on Medicaid
-19 million kids getting free school lunches
-1.4 million people getting affordable housing
-1.1 million hungry seniors fed
-0.8 million children given free child care

Why didn't the Biden administration get more credit for its investments? In part, because they didn't raise wages or create jobs widely enough or quickly enough. @samthorpe.bsky.social and I examine the political economy of industrial policy across America's energy communities

This elitist view that only rich/Ivy/private school kids should study/have access the liberal arts is so deeply ingrained in so many highly educated Democrats’ views (including tons who majored in the lib arts themselves) that they don’t even realize they hold it, let alone how ugly & elitist it is

IRS improperly disclosed confidential immigrant tax data to DHS The tax agency only recently discovered it improperly disclosed tax information on thousands of the wrong people to immigration enforcement.

🚨 SCOOP: The IRS improperly disclosed confidential immigrant tax information to DHS, per sources.

It opens up HUGE liability for the US government.

Trump is suing the IRS over substantially the same disclosures -- for $10 billion.

🎁 Gift link:

This was to be expected - after cutting support to pro-democracy civil society last year, the US state is now looking to actively support far-right affiliated think tanks and charities in Europe.

Senator Chuck Schumer conducts a news conference in the U.S. Capitol in May 2025. Image: Tom Williams/CQ Roll Call via AP Images FORUM How Not to Defeat Authoritarianism Moderation used to help Democrats win, but its advantages now have been greatly exaggerated. Adam Bonica, Jake Grumbach With responses from → Cori Bush, Amanda Litman, Matthew Yglesias, G. Elliott Morris, Julia Serano, Eric Rauchway, Suzanne Mettler & Trevor E. Brown, Thomas Ferguson, Timothy Shenk, Jared Abbott & Milan Loewer, Jenifer Fernandez Ancona, Lily Geismer, Danielle Wiggins, William A. Galston, and Henry Burke

We have a Boston Review Forum out today on the Democratic Party in a time of authoritarianism

www.bostonreview.net/forum/how-no...

Bar chart showing lifetime cost of the Republican megabill by income quintile for those born in 2025, including effects of higher federal debt. Four red bars show losses: Bottom 20% loses $17,200, second quintile loses $9,600, middle quintile loses $9,800, fourth quintile loses $4,300. One yellow bar shows the top 20% gains $2,600. Title states "Only households with the highest incomes will gain" and "Households with the lowest incomes lose the most." Source: Penn-Wharton Budget Model, July 8, 2025. Chart by Center on Budget and Policy Priorities.

A @budgetmodel.bsky.social analysis of the megabill's combination of tax cuts, cuts to programs, and higher deficits will make the bottom 80 percent of kids born today worse off in the long run.

Republican Megabill Trades Essential Support to Low-Income People for Skewed Tax Cuts The sprawling megabill passed by the Republican-controlled Congress and signed by President Trump in July 2025 will redistribute trillions of dollars upward over the next decade, making it harder for ...

New 25-page @centeronbudget.bsky.social paper from me summarizing the distributional, fiscal, and economic effects of One Big Beautiful Bill's tax cuts and cuts to health care, food assistance, student loans, and climate investments. 🧵

www.cbpp.org/research/fed...

📢now forthcoming in ECMA!

The Class Gap in Career Progression: Evidence from US Academia

Class is rarely a focus of research or DEI in elite US occupations.

Evidence suggests it should be: we find a large class gap in at least one occupation - tenure-track academia...🧵

rather than assuming that those mechanisms somehow operate by default.

I don't have any conclusions about this yet. But it seems like we need to be spending more time on the question of *how* we can effectively mobilize nonviolence in the face of violence to shape public opinion, and *how* we can use state repression to bring more and more people into the movement,

So we're in a tough place. Nonviolence is necessary, both morally and tactically. But the usual 'levers' that nonviolence would pull - the moral conscience of the opposition - are arguably less effective than they've been since the Civil War.